Zander Announces Strategy Reset For Motorola

The CEO hopes to attract multimedia-hungry consumers by focusing on Linux, Java, 3G, video, and messaging.
Motorola's thinner, faster, multimedia-packed version of its popular Razr phone is part of the company's new strategy.

The new Razr 2, due this July, was showcased for the first time at Motorola's "Mobile Experience" event held in New York City on Tuesday. CEO Ed Zander took the stage holding the Razr 2 in his hand and called it the "ultimate multimedia device." It does come with many significant enhancements that show the evolution of feature phones, meaning those that don't have a mobile operating system like smartphones.

The Razr 2 features a large external screen for viewing incoming calls and text messages without opening the phone, as well as a stainless steel internal frame for durability and a scratch-resistant glass surface. Beyond a nicer form factor, Zander said the phone would be available to users of all three major cellular technology networks around the world: HSDPA, EVDO, and GSM. And since call quality cannot solely be blamed on wireless carriers, Motorola included its CrystalTalk patented technology on the Razr 2, which automatically adjusts the phone's audio to make calls clearer in noisy environments.

But the most impressive thing about the Razr 2 is its multimedia capabilities, including a full HTML browser, Google mobile search, a music player, and a videoconferencing feature that lets users stream live video calls. Motorola plans to introduce a lot more phones -- both smartphones and feature phones -- with similar capabilities.

The company is re-setting its strategy, said Zander, and is currently focusing on three key areas: Linux/Java, third-generation cellular technology (3G), and multimedia and messaging. Some versions of the Razr 2, for example, will run Linux and Java software for a better user experience. Motorola's upcoming Rokr Z6 music phone will also use Linux/Java, making "your MP3 player obsolete," said Jeremy Dale, corporate VP of mobile devices global marketing at Motorola, during a presentation. Meanwhile, the new Moto Z8 is "the best multimedia [phone] on the market today," Dale said. Motorola is calling it the "media monster" for its ability to handle mobile TV, video, and music.

Rolling out phones based on faster cellular technologies is one way for Motorola to attract multimedia-hungry consumers. But it also needs to spend more time catering to a business audience that heavily relies on smartphones. Motorola's Moto Q smartphone, launched last year, came with several limitations -- most notably Microsoft's Windows Mobile 5.0 Smartphone Edition OS that excludes the full Mobile Office Suite. Starting next week, Motorola will make available the Moto Q 9 based on the latest Windows Mobile 6.0, which has the complete Office Suite, and a HSDPA/UMTS engine, which has the potential of reaching data throughput of up to 2 Mbps.

Unfortunately most of these ultra-fast multimedia phones will be available only in Europe and Asia, at least for now. A big reason for that is wireless carrier support. The major U.S. carriers have upgraded their networks to 3G technology, but they're still not as widespread or widely used as those overseas.

Motorola has plenty of competition at its heels, especially in the smartphone market. Apple's upcoming iPhone may not include the latest 3G technology, but its innovative design and built-in iPod music player has already attracted a huge fan base. Then there's Samsung's BlackJack, Research In Motion's BlackBerry Pearl, and other great smartphones that professional consumers can choose from.

After delivering disappointing financial results, Motorola will need a compelling strategy to bring its sales up again. Last month, the phone maker reported sales of $9.4 billion for the first quarter of 2007 and a net loss of $0.08 per share. "The performance in our Mobile Devices business in the first quarter is unacceptable and we are committed to restoring it to an appropriate level of profitability," said Zander in the earnings statement. This week, Zander was a lot more optimistic. He said: "We as a company have a lot more to do. There's a lot more to come from Motorola."